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"Let Unsound Money Wither Away"

Let Unsound Money Wither Away - Joseph T. Salerno - Mises Daily.

I cannot conceive of a view more diametrically-opposed to the conventional wisdom than that of Ludwig von Mises as explained in the linked article. The reason why trillions in taxpayers' money was kicked in to save the banks is because the banks are inherently unstable. Government support for them allows them to create the illusion of greater wealth in the good times, but comes at the price of propping up their business model in the bad times. A business model that, if applied to any other enterprise, would be considered insane.

We are so dependent on our drug of choice - debt - that the shock of allowing the market to eliminate (as it almost certainly would) fractional reserve banking is too great for most of us to contemplate. Decades down the road, people might - luxuriating in a stable society where money held its value long-term - wonder why we didn't do it sooner. But right now, the debtors who would be forced to admit that their lifestyle is many times beyond their means constitute if not a majority, a politically-decisive minority. And as for the politicians who would have to admit their complicity in the dangerous scam of fractional reserve banking, the idea is just beyond contemplation.